Although most banks and building societies do not have to deduct Income Tax from interest payments they make to depositors from April 2016, the same does not apply to others that pay interest.
Consider an owner managed company whose directors had deposited a considerable sum with the company that was credited to a loan account in the company books. Periodically, the company made an interest payment to the directors involved.
When the interest payment was made the company would have to pay 80% to the director and 20% basic rate tax to HMRC. The company would then be required to notify HMRC that the payment had been made and pay over the tax deducted.
The CT61 is the form that would need to be completed. Regular payments would have to be reported and paid quarterly. To ease the red-tape, payments of interest could be made at the end of the tax year in which case only one return would be necessary.
- Deadline approaching for checking property details - February 2, 2023
- Tax Diary February/March 2023 - January 31, 2023
- PAYE and overseas employees 24773 - January 31, 2023
- When you must register for VAT - January 31, 2023
- Limits to tax relief for pension contributions - January 31, 2023
- Corporation tax changes April 2023 - January 31, 2023
- Do not get caught out by dodgy job ads - January 31, 2023
- Electric car owners to save money under landmark initiative - January 26, 2023